How did Manhattan retail rents perform in Spring 2016 and which corridors were most affected?
Manhattan retail rents declined in Spring 2016 across most major corridors as supply increased and consumer spending slowed. Madison Avenue, SoHo, and Herald Square all saw year-over-year declines while the Financial District rose on the strength of new infrastructure and residential demand, underscoring how corridor-specific dynamics drive retail rent outcomes.
1. Manhattan retail rents declined across most corridors in Spring 2016, continuing the correction from 2015 peak levels. 2. The Financial District was the notable exception, showing rent growth driven by infrastructure improvements and new residential demand. 3. Major corridors including Madison Avenue, SoHo, and Herald Square experienced meaningful year-over-year rent declines. 4. Lease execution timelines lengthened as retailers became more cautious, waiting for asking rents to adjust further.
- The average asking price per square foot in Manhattan drops to $126 from $156 since Fall 2015
- If sluggish retail sales continue, the supply of available space will be expected to increase
- Not all areas were impacted: the Financial District saw asking rents for ground floor retail space increase 39%
Manhattan ground floor retail rents declined slightly in most areas, with only slight increases in some corridors year over year. This could be seen as a natural adjustment as price inflation created a low-competitive environment due to the increase of availability. The velocity of tenants committing to new leases has slowed and deals are taking longer to complete. Retailers are seeing uncertainty in the market, anticipating that this will impact the retail leasing market, and proceeding with caution when pursuing new leases as they expect asking rents to adjust from the historic highs of 2015.
The Financial District Corridor on Broadway between Battery Park and Chambers Street was the standout exception. Asking rents for ground floor retail space increased 39% from $234 per square foot last Spring to $326 per square foot in Spring 2016. This was predominantly due to transportation improvements with the completion of the Fulton Center and World Trade Center Transportation Hub, and new residential development in this area and in nearby Downtown Brooklyn.
Madison Avenue has continued to struggle with supply issues as the luxury retail market has slowed and exclusive brands have delayed leasing new space. The average asking rent for ground floor space along Madison Avenue between 57th and 72nd was $1,644 per square foot in Spring 2016, a decrease of 3% from $1,613 in Spring 2015. In SoHo on Broadway between Houston and Broome Streets, the average asking rent declined 16% from $977 to $824 per square foot. If sluggish retail sales continue, the supply of available space will increase and the next twelve months will be a decisive period for the retail leasing market.
Manhattan retail rents declined in Spring 2016 across most corridors, continuing a trend that had begun in 2015 as elevated supply, slower consumer spending, and the early effects of e-commerce displacement put sustained pressure on asking rents that had reached historic highs.
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